EU must become a ‘genuine federation’ to avoid deindustrialisation and decline, Draghi says

Published on
02/02/2026 – 13:05 GMT+1

If Europe does not transform itself into a “real union,” there is a “risk of Europe becoming subjugated, divided and deindustrialized,” Mario Draghi, the former Italian prime minister and president of the European Central Bank, said in a speech at Belgium’s University of Leuven on Monday.

According to Draghi, “power requires Europe to move from confederation to union” because the global order is “now dysfunctional”.

“A world with less trade and looser regulations would be painful,” he said.

In his speech when receiving an honorary degree from the university, Draghi said he believed that “grouping small countries together does not automatically create a powerful bloc”, and argued that in the areas where Europe has “federalized” – trade, competition, the single market, monetary policy – ​​it is “respected as a power and [can] “Let’s talk as one.”

As evidence, he pointed to recent “successful” trade agreements with India and Latin America.

“Where we have not done so on defence, industrial policy, foreign affairs, we are treated as a loose assembly of medium-sized states that must be divided and dealt with accordingly,” Draghi said.

“Of all those who are now caught between the US and China, the Europeans alone have the option to become a real power themselves. So we have to decide: Will we remain just a big market subject to the priorities of others? Or will we take the necessary steps to become a power?”, Draghi asked.

“A Europe that cannot defend its interests will not long be able to preserve its values.”